Vol.32 Business Results for the 60th Term (April 1, 2009 to March 31, 2010)

Transcription

1 Securities code 5947 Rinnai Information for Shareholders Vol.32 Business Results for the 6th Term (April 1, 29 to March 31, 21)

2 To Our Shareholders M E S S A G E Susumu Naito Chairman Hiroyasu Naito President It is a pleasure to report on the Rinnai Group s performance in the fiscal year ended March 31, 21, and outline the Group s strategies for the future. In the year under review, the world economy showed moderate recovery in the wake of the global economic crisis, which began in the United States, boosted by economic expansion in China and economic stimulus measures taken by various national governments. The outlook for the Japanese economy remained unclear, however, due to difficult employment conditions and continued low levels of capital spending. This was despite some signs of economic buoyancy. In the domestic housing appliance industry, new housing starts, which were weak for some time, began to firm thanks to government economic stimulus measures. Overall conditions remained severe, however, due to continued weakness in housing starts and low demand for home renovations. The period under review was the first year of the Rinnai Group s new medium-term business plan, entitled Reform and Breakthrough. During the year, we strove to reinforce the Group s overall foundation with a strong emphasis on the Reform aspect of the plan. With respect to domestic sales, the Kitchen Appliances segment benefited from healthy replacement demand for both tabletop and built-in stoves. Also, the Hot-Water Units segment posted an increase in sales as the new E series of systems, more lightweight than before, generated widespread popularity in light of proliferation of high-efficiency systems and current trends. Overseas, we enjoyed an increase in demand thanks to economic growth in China and Southeast Asia. We also received strong support for Rinnai as a high-quality, environmentally friendly brand. Meanwhile, our business in North America, which had been impacted by economic recession, began to recover in the second half of the year. In Australia, with tightening environmental regulations, the market for solar hot water systems and gas instant-heating systems expanded. Due to the prolonged appreciation of the yen, however, overseas sales declined year-on-year in yen terms. On the earnings side, we reported a decrease in costs thanks to a decline in raw materials prices, together with our efforts to cut fixed costs and make new products in-house. During the year, we also promoted a rigorous Group-wide campaign aimed at eliminating waste. Thanks to these efforts, we reduced inventories which helped enhance investment efficiency and improve our financial position. Moreover, our South Korean subsidiary, which posted a loss in the previous year due to a large-scale increase in its allowance for doubtful accounts, took measures to strengthen its financial position a strategy that boosted consolidated earnings. The results of the aforementioned efforts are discussed later in this report. The Company declared a 22. year-end cash dividend, bringing total annual dividends to 42. per share. This decision was based on consideration of many factors, including consolidated performance and payout ratio, and reflects our basic policy for appropriation of earnings. The Rinnai Group has positioned the year ending March 211 the second year of its medium-term Reform and Breakthrough plan as a year of full-scale progress toward becoming a comprehensive manufacturer of heating products. Going forward, we expect a further shift to high-efficiency products in industrialized nations due to government subsidy systems and environmental regulations. In new emerging economies, such as China, Southeast Asia, and Brazil, we look forward to further proliferation of our heating products as rising populations and living standards lead to higher demand. Placing top priority on making safe, high-quality products, the Rinnai Group is committed to actively delivering optimal heating products to suit the environmental and energy situations of various world nations. We look forward to the ongoing support and cooperation of shareholders in these endeavors. June 21 Susumu Naito Chairman Hiroyasu Naito President

3 President Naito talks about Rinnai s business strategies I N T E R V I E W Supporting the heat-energy and lifestyle needs of people all over the world as a comprehensive heat-energy appliance manufacturer Hiroyasu Naito President Overview of the year ended March 31, 21 Steady reinforcement of the entire Group s base The Rinnai Group is currently focusing on its three-year medium-term business plan, entitled Reform and Breakthrough, launched at the beginning of the fiscal year under review. Under the previous V-Shift Plan, we recorded stable achievements centered on the activities of Rinnai Corporation. These results are attributable to achieving the plan s objective of a shift from quantity to quality, which entailed a review of costs and the adoption of a high-value-added strategy that leverages Rinnai s manufacturing technologies. The aim of the current business plan is to make a further leap forward as a comprehensive heat-energy appliance manufacturer that produces mainly gas appliances. We will achieve this by ensuring that our high-value-added strategy permeates across all domestic and overseas Group companies. In the year ended March 31, 21, the plan s inaugural year, Rinnai reported consolidated net sales of billion, partly due to the impact of foreign exchange rates on overseas sales. Operating income amounted to 2.3 billion, a solid result that reflects the gradual reinforcement of the Group s overall business base. Medium-Term Business Plan Reform and Breakthrough (April 29 March 212) Aims Supporting peoples lifestyles all over the world and the global environment as a comprehensive heat-energy appliance manufacturer Product vision: Comprehensive heating appliance manufacturer that delivers environmentally responsible products Regional vision: Global company that improves the lifestyles of people all over the world Business vision: Company with a unique business model that attracts people and business partners Three core policies Consolidated targets (fiscal year ending March 31, 212) 1 Relentlessly promote waste-elimination activities Net sales 257. billion 2 Reinforce Group operations Solidify our position as a comprehensive heating appliance manufacturer Operating income 24. billion 3 Operating margin 9.3% 1

4 President Naito talks about Rinnai s business strategies Environment-Oriented Manufacturing Making Eco-Jozu the de facto industry standard Adhering to its mission of using heat to provide society with comfortable lifestyles, Rinnai endeavors to develop products that meet global environmental requirements underpinned by the Three Es concept of Ecology, Economy, and Evolution. The gas appliance industry in Japan is supporting a global warming initiative that will see the highly efficient Eco-Jozu series of hot-water/heating systems adopted as the industry standard by 213. Rinnai s Eco-Jozu E-Series delivers not only high energy efficiency, but has received considerable acclaim for its enhanced functionality, stylish design, and its small lightweight body measuring just 6mm in height. Launch of Hybrid Hot-Water Unit a World First The Japanese government has set a 25% reduction in greenhouse gases (compared with 199 levels) as an urgent medium-term target for the entire country. Faced with this challenge, Rinnai has combined gas and an electric heat pump to develop a hybrid hot-water unit that boasts worldleading environmental performance. Rinnai released this new product in the domestic market in April 21. Overseas, Rinnai Australia Pty., Ltd. has already launched a gas-solar hot-water System. This system has been popular not only in Australia, but is also sold by Rinnai (Malaysia) Sdn Bhd. We will continue taking advantage of the cutting-edge technologies we have accumulated as a comprehensive heat-energy appliance manufacturer to meet worldwide demand for diversified energy resources. Domestic and Overseas Strategies Kitchen appliances realize excellent quality and economy Since launching our previous medium-term plan, we have embraced a core policy of relentlessly promoting wasteelimination activities. One outcome of this initiative is our expanded lineup of kitchen appliances. We are proud of our achievements in Japan, where Si sensors (oil overheating prevention and flame failure safety devices) have already been made the industry standard for all gas stoves. We also created the best selling Delicia and Mytone series. These easy-to-clean kitchen products offer functionality and stylish design on top of safety and peace of mind. Furthermore, in recent years Rinnai has released a succession of standard new products that offer customers high added value in a variety of price brackets. These products feature both good quality and excellent economy thanks to Rinnai s comprehensive revamp of its production systems using cutting-edge know-how and cost Rinnai s Total Solutions Address Global Environmental Needs Eco-Jozu Eco-Jozu E Series of compact, lightweight, highly efficient hot-water units Hybrid Hot-Water Unit ECO ONE Hybrid hot-water unit combining gas and electricity 2 Gas-Solar Hot-Water System

5 I N T E R V I E W reduction efforts and are the culmination of Rinnai s unparalleled manufacturing technologies. In Japan, Rinnai is channeling efforts into the development of universal design products in order to address the needs of the country s aging society. Rinnai Brand Rapidly Penetrating Overseas Markets Targeting a medium-term ratio of 6:4 for domestic and overseas sales, Rinnai views the United States and China as strategic overseas markets. In the United States, the convenience of gas instant-heating hot-water units has seen the rapid proliferation of this type of tankless hot-water system. The economic effects of the late 28 financial crisis have gradually waned, contributing to strong demand and healthy sales for tankless systems, mainly Rinnai-brand units, as replacements for traditional tank-based units. In China, where hot-water units with a heat-efficiency rating of less than 84% have been banned since 28, Rinnai has expanded its sales channels through an alliance with Hong Kong Gas. As a result, consumer recognition of the excellent safety and peace of mind offered by Rinnai products is growing. What is the Rinnai Spirit? Quality is always our top business priority Rinnai is proud of its cutting-edge technological capabilities as a comprehensive heat-energy appliance manufacturer and a world leader in gas appliances. Efficient and highquality manufacturing activities are possible only when there is constant and close cooperation between production and the various other stages, including the planning and design phases of product development. The pursuit of manufacturing technologies is not merely a matter of reducing costs. The belief that Quality is our destiny is the cornerstone of Rinnai s operations. Guided by this belief, in March 21 we established the Production Technology Center, in Japan. The center serves as a base for establishing new elemental technologies, and for training staff from domestic and overseas Group companies. In order to protect the safety of customers, we continue to tell our employees that quality takes priority over everything else. For example, we provide free nationwide inspections of small hot-water/heating systems for our customers as a preventative measure. This is despite the fact that, following an accident in February 27, Rinnai s product was judged not to be at fault by the Yokohama District Public Prosecutors Office. Rinnai will continue combining know-how and technology in its quest to become the world leader in quality. We also continue supporting the heat-energy and lifestyle needs of people all over the world by developing optimal environmentally responsive and energy-saving products. Products incorporating Rinnai s unique manufacturing technologies Tabletop stove without drip tray convenient for cleaning up spills (released July 21) Bathroom heater/dryer offers a safe and relaxing bathing experience Udea series of universal design built-in stoves 3

6 Rinnai Lifestyles World Leader in Energy-Saving! Release of Hybrid Hot-Water Unit with lowest CO2 emissions! Rinnai has developed the world s first* Hybrid Hot-Water Unit that combines the highly efficient Eco-Jozu gas water heater and an air-source heat pump. Called ECO ONE, the unit went on sale in Japan in April 21. (*Rinnai survey current as of January 21) Hybrid Hot Water Unit ECO ONE Hybrid Hot Water Unit takes technology one step further Optimum mix of gas and airsource heat achieved by combining the Eco Jozu and a heat pump Configuration of Hybrid Hot-Water Unit Hot water and room heating using optimal method depending on use Normal hot water usage Bath or use of large amount of hot water Room heating Heat pump boils water in small tank Both Eco Jozu and heat pump operate. Eco Jozu operates. Gas-source heat Tank unit Heating Floor heating Bathroom heater/dryer Eco Jozu Air-source heat Heat pump Small tank Hot water Hot water Fully automatic bath Shower Water 4

7 D A I L Y L I F E Hybrid Hot Water Heater s Strength: Outscores All Hot-Water/Heating Systems in Four Key Areas No. 1 in Environmental Friendliness Hot-water unit with the lowest CO2 emissions! Today, Japan is targeting a 25% reduction in CO2 emissions compared with 199 levels. Approximately 9. million, or 21%, of the targeted 42 million-ton reduction in household emissions set by the Japanese government will be achieved by highly efficient hot-water/heating systems. By significantly reducing CO2 emissions, the Eco One has the lowest level of CO2 emissions of all domestic hot water heaters, realizing world-leading environmental performance Comparison of annual CO2 emissions (Based on thermal power plant) (Unit: kg) 1,5 1,274kg 1,243kg 1, 5 94kg Hybrid Hot- Water Unit Eco Cute 46-liter Conventional gas bath water heater Four-person household: Annual hot water load of 3.97Gcal based on operating mode of the Japan Industrial Association of Gas and Kerosene Appliances. LPG/CO2 emission coefficient: 6.1 kg CO2/m 2 ; Electricity (thermal)/co2 emission coefficient:.69 kg CO2/kWh; Electricity (all sources)/ CO2 emission coefficient:.41 kg CO2/kWh Source: Energy Conservation Center of Japan, December 28, 27 No. 1 in Economy Low running costs Cost of hot water more than halved! Comparison of running costs for hot water and heating (Unit: 1,) 1 Hot water only costs approx. 93, Hot water + heating costs the same at approx. 93, 5 Hot water Conventional gas bath water heater Less than half Heating Hot water Hybrid Hot-Water Unit Four-person household: Average hot water usage plus floor heating for a 12-mat area for eight hours/day, bathroom heating used once a day for four months during winter. Gas charges (LPG); 45/m2 throughout the year for both the Hybrid Hot-Water Unit and a conventional gas bath water heater No. 1 in Energy-Saving 121% primary energy efficiency! No. 1 in Comfort Heating function comes as standard feature! 5

8 Global Network As of March 31, 21, the Rinnai Group consisted of the parent company, 41 subsidiaries (14 domestic and 27 overseas), and two overseas affiliated companies, for a total of 44 companies. Domestic Overseas Domestic Subsidiaries Manufacture of Products Yanagisawa Manufacturing Co., Ltd. Rinnai Technica Co., Ltd. Manufacture of Components RB Controls Co., Ltd. Rinnai Precision Co., Ltd. RT Engineering Co., Ltd. Japan Ceramics Co., Ltd. Noto Tech Co., Ltd. Techno Parts Co., Ltd. RB Techno Co., Ltd. Sale of Products Rinnai Net Co., Ltd. RG Co., Ltd. Other Business Rinnai Enterprises Rinnai Kogyo Co., Ltd. Rinnai Tech Hokuriku Co., Ltd. Consolidated subsidiary Nonconsolidated subsidiary Affiliated company (equity method applied) Affiliated company (equity method not applied) Overseas Subsidiaries and Affiliates Holding Company/Sale of Products Rinnai Holdings (Pacific) Pte Ltd. Sale of Products Rinnai Australia Pty., Ltd. Rinnai America Corporation Rinnai Hong Kong Ltd. Rinnai Canada Holdings Ltd. Guangzhou Rinnai Gas and Rinnai Italia S.r.l. Electric Appliance Co., Ltd. Rinnai SE Corporation Rinnai UK Ltd. Rinnai Plus Corp. Manufacture and Sale of Products Rinnai New Zealand Ltd. Rinnai Taiwan Corporation Rinnai Korea Corporation Shanghai Rinnai Co., Ltd. Rinnai (Thailand) Co., Ltd. Rinnai Viet Nam Co., Ltd. RCE Korea Corporation Rinnai Brasil Heating Technology Ltd. P.T. Rinnai Indonesia Rinnai (Malaysia) Sdn. Bhd. RBS Thermo Technology Co., Ltd. Guangzhou Ming Hai Gas & Electrical Appliance Co., Ltd. Manufacture and Sale of Components RB Korea Ltd. RK Precision Co., Ltd. RS Korea Ltd. Shanghai RB Controls Co., Ltd. Mikuni RK Corporation Other Business Rinnai Services (MS) Corporation Rinnai CS Corporation 6

9 GLOBAL NETWORK R I N N A I T O P I C S Japan China Europe Construction of Production Technology Center In March 21, Rinnai established the Production Technology Center in the southern sector of the Oguchi Factory in Aichi Prefecture. With a total floor area of 4,877m2, the center consists of a three-story production technology department and a one-story production technology plant. The Center is tasked with the development of high-precision processing technologies and advanced automated technologies to raise the level of the core technologies used in Rinnai s cutting-edge manufacturing activities. The Center will also provide manufacturing-related training to staff from both domestic and overseas Group companies. Through its activities, the Center will facilitate the Rinnai Group s global development of production technologies as a manufacturer of comprehensive heat-energy appliances. Completion of the Rinnai Xiwang Elementary School in Anhui Province, China Recently, the Rinnai Xiwang Elementary School was completed in Huoshan County in the western part of Anhui Province. Built as part of the Shanghai City Xiwang (Wish) Project funded by Shanghai Rinnai Co., Ltd., the new school offers a greatly improved learning environment for local children. With a capacity for around 3 children, and dormitory facilities for 1 or more pupils, the school also has an IT classroom with computers, projectors, and other equipment worth around 8, yuan. Representatives from Shanghai Rinnai attended the opening ceremony held on April 13, 21. They presented the children with gifts, including mathematics textbooks and aids and other useful school supplies. Rinnai Italia S.r.l. Exhibits in MCE 21 in Milan In March 21, Rinnai Italia S.r.l. exhibited in Mostra Convegno Expocomfort (MCE) 21, a leading international fair for air conditioning and heating equipment and appliances, sanitary ware, and plumbing technology. A total of 2,3 companies took part in this year s exhibition, which adopted Energy saving and efficiency as its main theme. Rinnai Italia displayed its new product lineup, centering on the Hybrid Hot-Water Unit and Condensing Water Heater. Many visitors stopped by the stylish Rinnai booth and showed great interest in the items on display. 7

10 Consolidated Business Results Performance Consolidated net sales for the year amounted to 226,117 million, down 4.5% from the previous year. Operating income increased 35.3%, to 2,392 million, and ordinary income jumped 65.8%, to 21,481 million, owing to the extinguishment of a foreign exchange loss on yen-denominated liabilities posted by our South Korean subsidiary in the previous fiscal year. Net income surged 22.6%, to 11,642 million. Results by Business Segment Kitchen Appliances In Japan, where our business was affected by a decline in new construction-related demand, we sought to meet replacement demand by renewing our lineup of tabletop and built-in stoves. Accordingly, domestic sales in this segment remained mostly unchanged. Overseas, we benefited from higher demand in China and healthy sales in Southeast Asia, but foreign exchange factors had a major impact on our performance in South Korea. As a result, sales in this segment amounted to 78,669 million, down 3.1% from the previous year. Hot-Water Units In Japan, where new housing starts were weak, we expedited our shift to high-efficiency systems with the introduction of the new E Series, achieving a solid performance. Overseas, unit sales in the United States declined due to economic recession. By contrast, we posted an increase in sales in China, supported by powerful economic growth. Meanwhile, sales in Australia remained healthy thanks to environmental measures implemented by the government. However, foreign exchange factors had a major negative impact on sales in various overseas nations. Accordingly, total sales in this segment edged down.6%, to 15,96 million. Air-Conditioning and Heating Units Domestic sales of our mainstay fan heaters were weak due to the warm winter in Japan. Overseas, as well, sales in Australia were affected by the second consecutive warm winter, as well as inventory adjustments. Consequently, total sales in this segment fell 15.4%, to 14,635 million. Commercial-Use Equipment In Japan, we enjoyed healthy sales of convection ovens and rice cookers. In South Korea, where commercial-use equipment accounts for high share of total sales, we posted an increase in sales. Total segment sales edged up.7%, to 6,268 million. Others In South Korea, We reported a decline in sales of other products, mainly due to the reorganization of our business in South Korea, and change of accounting treatment which shifted our solar system business to the Hot-Water Units segment. As a result, sales in the Others segment fell 19.%, to 2,636 million. 8

11 FINANCIAL DATA Net sales by business segment Net sales by region Sales, operating income ratio Commercial-use equipment 6.2 billion 2.8% ( %) Air-conditioning and heating units 14.6 billion 6.5% ( %) Hot-water units Others 2.6 billion 9.1% ( %) Total billion ( 4.5%) 15.9 billion 46.8% (.6%) Kitchen appliances 78.6 billion 34.8% ( 3.1%) Parentheses indicate percentage change over previous corresponding period. Others 26.8 billion 11.9% ( 13.%) Asia excluding Japan 37.7 billion 16.7% ( %) Total billion ( 4.5%) Japan billion 71.4% ( %) Parentheses indicate percentage change over previous corresponding period. Composition of Asia, excluding Japan: South Korea, China, Taiwan, Thailand, Singapore and Vietnam Composition of Others: United States, Australia, and New Zealand. Note: The above amounts exclude inter-regional transactions. (Billions of yen) FY25 FY26 FY27 FY28 Net sales Operating income ratio FY29 Ordinary income, net income Total assets, net assets, equity ratio ROE, ROA (Billions of yen) (Billions of yen) % ROE ROA FY (%) FY FY FY FY FY25 FY26 FY27 FY28 FY29 26/3 27/3 28/3 29/3 21/3 Ordinary income Net income Total assets Net assets Equity ratio Notes: 1. The above net assets graph indicates the amount of total shareholders equity at 26/3, and the amount of net assets from 27/3 in accordance with the enforcement of Corporate Law. 2. From 27/3, the equity ratio is calculated using net assets excluding minority interests. 9

12 Consolidated Balance Sheets (Millions of yen) Current Term (As of Marh 31, 21) Previous Term (As of Marh 31, 29) Current Term Previous Term Current Term Previous Term Assets Current assets Cash and deposits Notes and accounts receivable Marketable securities Products Raw materials and stores Deferred taxes assets Other Less allowance for doubtful accounts Fixed assets Property, plant and equipment Buildings and structures Machinery and vehicles Tools and fixtures Land Leased assets Construction in progress Intangible fixed assets Investments and advances Investments in securities Investments Long-term loans Deferred income taxes Other Less allowance for doubtful accounts Total assets 133,522 25,248 53,133 29,242 13,336 9,381 2,541 1,364 (725) 88,82 43,416 16,31 8,718 4,43 13, ,49 43,895 31,888 1,445 11,383 (821) 222, ,517 21,728 51,972 3,633 16,213 9,224 2,379 1,239 (1,875) 79,38 41,332 14,581 8,672 4,363 12, ,49 36,567 25, ,663 8,613 (1,48) 21,825 Liabilities Current liabilities Notes and accounts payable Short-term debt Other payables Accrued consumption texes Accrued income taxes Accrued employees bonuses Allowance for product guarantee Allowance for inspection cost Other Long-term liabilities Long-term debt Deferred taxes liabilities Accrued employees retiremenet benefits Accrued officers retirement benefits Other Total liabilities Net Assets: Shareholders equity: Common stock Capital surplus Earned surplus Treasury stock Other adjustments: Unrealized gain on marketable securities Foreign exchange translation adjustment Minority interests Total net assets Total liabilities and net assets 69,851 39,92 8,123 8,759 1,9 5,344 2,76 1, ,235 9,971 2,859 4, ,513 79, ,356 6,459 8, ,563 (1,386) (42) 176 (578) 3, ,52 222,324 62,456 37,696 6,87 8, ,24 2, ,35 9,575 3, 3 4, ,266 72,31 14,364 6,459 8, ,336 (151) (4,377) (1,471) (2,95) 2,86 138,794 21,825 1

13 FINANCIAL DATA Consolidated Statements of Income (Millions of yen) Current Term (From April 1, 29, to March 31, 21) Previous Term (From April 1, 28, to March 31, 29) Current Term Previous Term Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating income Other income Other expenses Ordinary income Extraordinary income Extraordinary loss Income before income taxes Income taxes: current Income taxes Minority interests (deduction) Net income 226, ,748 67,368 46,976 2,392 1, , ,337 2,337 7,892 (1) , , ,667 68,73 53,3 15,69 2,47 4,519 12, ,917 11,13 6,522 1, ) 3,847 Consolidated Statements of Cash Flows (Millions of yen) Current Term (From April 1, 29, to March 31, 21) Previous Term (From April 1, 28, to March 31, 29) Current Term Previous Term Cash flows provided by operating activities Cash flows used in investing activities Cash flows provided by (used in) financing activities Cash and cash equivalents at end of year 29,687 (15,865) (12,23) 46,57 15,198 (9,278) ,943 11

14 Corporate Data CORPORATE DATA Directory (As of March 31, 21) Incorporated September 1, 192 Established September 2, 195 Paid-in capital 6,459,746,974 Head office 2-26, Fukuzumi-cho, Nakagawa-ku, Nagoya TEL: Number of employees 3,57 Domestic Network (As of March 31, 21) Factories and related centers Technology Development Center, Production Technology Center, Integrated Logistics Center, Oguchi Factory, Seto Factory, Asahi Factory, Aichi Factory, Branches Tohoku, Kanto, Chubu, Kansai, Kyushu Domestic sales offices Sapporo, Sendai, Niigata, Tokyo, Kita-Kanto, Higashi-Kanto, Minami-Kanto, Shizuoka, Nagoya, Osaka, Kyoji, Hyogo, Hiroshima, Takamatsu, Fukuoka Domestic satellite offices (76 offices) Other domestic offices 15 Training Centers*, 6 Customer Centers * Include Hot Labs which conduct experiments and have showrooms where customers can try our products. Board of Directors (As of June 29, 21) Chairman Susumu Naito Vice Chairman Kenji Hayashi President* Hiroyasu Naito Director and Executive Vice President Tsunenori Narita Director and Managing Executive Officer Masao Kosugi Director and Managing Executive Officer Yuji Kondo Director Kozo Masuoka Managing Executive Officer Takashi Nagasaka Managing Executive Officer Yuzo Yoshida Managing Executive Officer Sadao Yoshimura Executive Officer Takeshi Iwata Executive Officer Tadanobu Netsu Executive Officer Katsuhiko Shinji Executive Officer Terumasa Kaneko Executive Officer Kinji Mori Executive Officer Yasuo Koketsu Executive Officer Izuka Suzuki Executive Officer Takashi Sonoda Corporate Auditor (Standing Auditor) Katsuhiro Warita Corporate Auditor (Standing Auditor) Yasuhiko Goto Corporate Auditor Ken Yazaki Corporate Auditor Kiyoakira Fukui Notes: 1. President (*) doubles as Executive Officer. 2. Ken Yazaki and Kiyoakira Fukui (Corporate Auditors) serves as an outside auditor. 12

15 Share Information (As of March 31, 21) STOCK INFORMATION Share Composition Number of shares Authorized: 2,, Outstanding: 54,216,463 (Including treasury stock) Number of shareholders: 3,67 Composition of shareholders Securities companies.2 Foreign investors 28.5 Corporations 27.6 Own shares 4.5 Individuals and others 18.3 Financial institutions 2.9 Shareholders by region Chugoku.2 Kyushu.3 Kinki 1.1 Kanto 24.3 Overseas 28.4 Hokkaido.1 Tohoku.2 Shikoku.1 Own shares 4.5 Chubu 4.8 Major Shareholders Name Shares held (Thousands) Naito Co., Ltd. 6,715 Robert Bosch Investment Nederland B.V. 4,781 Yoshikane Shoji Co., Ltd. 4,2 Deutsche Bank AG Frankfurt Domestic Custody Services 3,617 The Master Trust Bank of Japan, Ltd. (Trust Account) 3,1 Kenji Hayashi 2,652 Japan Trustee Services Bank, Ltd. (Trust Account) 2,14 Susumu Naito 1,478 Nippon Life Insurance Company 1, Rinnai Kyoshinkai 65 Note: Above figures exclude number of treasury stock held by the Company, 2,453 thousand shares. Stock Price Range 6, 5, 4, 3, 2, 1, Stock price (Yen) Trading volume (Thousands of shares) Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar , 12,5 1, 7,5 5, 2,5 13

16 Memorandum for Shareholders Financial year From April 1 to March 31 Annual meeting of shareholders Every June Dates of record Annual meeting of shareholders, year-end dividend: March 31 Interim dividend: September 3 Minimum trading unit 1 shares Public notice Public notices by the Company will be announced online. However, if due to accident or some other unavoidable reason that prevents the Company from completing an online announcement should arise, a public notice will be made by posting in the Nihon Keizai Shimbun. Transfer agent The Chuo Mitsui Trust & Banking Company, Limited. 33-1, Shiba 3-chome, Minato-ku, Tokyo Mailing and contact The Chuo Mitsui Trust & Banking Company, Limited. Stock Transfer Agency Department 8-4, Izumi 2-chome, Suginami-ku, Tokyo (Telephone) Freedial Transfer administration offices: The Chuo Mitsui Trust & Banking Company, Limited.; Head office, and branches throughout Japan Japan Securities Agents, Ltd.; Head office, and branches throughout Japan Stock Listings: Tokyo Stock Exchange, First Section Nagoya Stock Exchange, First Section Inquiries Pertaining to Share-Related Procedures 1. Non-Payment of Dividends Please contact the transfer agent (Chuo Mitsui Trust & Banking; contact details above). 2. Change of address, purchases (or increases in purchases) of fractional shares, designation of dividend payment method, etc. Please contact the securities company handling your account. With respect to shares for which a special account has been opened (due to absence of account with a securities company), please contact the transfer agent, which is in charge of handling special accounts. Notice regarding text to be used for shareholders names and addresses With the conversion to electronic stock certificates, shareholder names and addresses that include kanji characters not contained in JASDEC s giro system are converted, in whole or in part, to kanji characters recognized by JASDEC or to katakana text for inclusion in the Shareholder Register. Shareholders are asked to understand that notification documents sent to them may include characters in the name and/or address that have been converted to JASDEC-recognized text. For inquiries about characters used in registration of shareholder names and addresses, please contact your securities company (or the transfer agent, in the case of shareholders with special accounts). Dividend Calculation Notice The Dividend Calculation Notice, sent to shareholders at the time of dividend payment, also functions as the Payment Notice according to regulations under the Act on Special Measures Concerning Taxation. This document can be used as a reference attachment when preparing final tax returns. From this year, the Company will issue a Dividend Calculation Notice to shareholders who receive dividends by presenting the Year-End Dividend Receipt. * Shareholders who prepare their own final tax returns are asked to the Dividend Calculation Notice in a safe place. Rinnai Corporation 2-26, Fukuzumi-cho, Nakagawa-ku, Nagoya , Japan Telephone: